Sustainability Reporting (ESG) and Firm Value Nexus: The Role of Accounting Information Timeliness

Abstract

This study investigated the relationship between ESG reporting and firm value, with an emphasis on the moderating effect of accounting information timeliness on this relationship. Value-enhancing theory provided the theoretical bedrock, based on the argument that firms report sustainability activities to enhance value. Secondary sources were used to obtain data on 76 non-financial listed firms in Nigeria for the 2011-2023 financial years. The study employed Weighted Least Squares regression to address heteroscedasticity concerns. The study found mixed results because environmental and governance disclosures had a significant effect on firm value, but social disclosures did not. Again, accounting information timeliness had a significant negative effect on firm value, suggesting that the timeliness quality sent signals to investors about the reliability of the report and value of a firm. In addition, the lack of timely information significantly reduced the effect of sustainability reporting on firm value. The study concluded that accounting information timeliness made investors have confidence in the sustainability report and was therefore a good moderator of any negative impact of sustainability reporting on firm value. The study recommended the timely provision of accounting information and a sustainability report to avoid being penalized by investors in the capital market.